Increasing Profitability While Growing Price Image
Frank Scorpiniti, CEO of health and wellness store, Earth Fare, talks to Ken Ouimet about how they came up with a unique food philosophy of “Live Longer With Earth Fare,” and how they have been able to grow their price image while increasing enterprise profitability using data science.
Below is the transcript of their conversation:
Ken: A couple weeks ago you had me over for your store opening in Fort Mill, South Carolina. A really impressive store, I loved how it was that you just see it right off the road. How are customers perceiving prices in the stores?
Frank: Customers loved it, they love the store experience and we get a lot of feedback about the compelling value that we’re offering the consumer for the cleanest products available. So, they’re pretty impressed with our pricing these days.
Ken: That’s great.
Frank: We have been engaged with Engage3 to help us get better at our pricing for our customers in order to offer them compelling value while at the same time maintaining our margins, and that’s been really important for us, it’s helped advance our business in our customers eyes. In addition to that, we’ve been using artificial intelligence to help us with our weekly promotionals, to bring the best products to our customers at the right time, the right frequency, and the right price.
Ken: You have a marketing campaign, “Live Longer with Earth Fare—Blindfolded.” Very bold statement, can you tell us what that means?
Frank: We were very focused on trying to call out the value proposition of Earth Fare. Why should I shop at a place that has a food philosophy? And early on in the marketing and what we wanted to share our voice with our consumer we were trying to articulate each and every product, why it was beneficial, why it didn’t contain certain items, and that became very noisy. So, after working on it quite a long time, the brand mission of our businesses, it’s really to live a healthier, happier, and longer life. And so “Live Longer with Earth Fare” was born. And we say that you can if you want to be silly and take a risk, you could shop our aisles blindfolded knowing that nothing you ever take home to your family contains artificial chemicals, colors, emulsifiers, any chemical on the boot list. That’s hundreds of chemicals that we don’t allow in our store.
Ken: Do you see any other retailers coming up to those standards?
Frank: Interestingly enough, we are extremely excited because we’re the only ones in North America with this kind of food philosophy. It is very unique and I think it’s what gives us the ability to continue to grow in this voraciously competitive environment. We’re offering the consumer that they’re not able to get anywhere else.
Ken: That’s quite a service to the customer. How do you help them understand what you’re providing them? There’s companies like Kroger, Sprouts, a lot of other stores, Costco, are coming with organic products into this market.
Frank: What’s interesting, a lot of the other grocery retailers do have some of these products that are clean and healthier products, but in those instances you’re having to shop for those products across a minefield of products that are full of chemicals that are bad for you. And so, if the consumer has time to read every label in a store and carefully select without making a mistake.
Ken: And they have a three-year-old in the cart grabbing stuff.
Frank: Right, that’s a lot of time required. And so that’s the benefit is just get in don’t worry about reading labels. Everything in the store is clean and you’re going to find compelling value on every aisle.
Ken: When you think about your price image do you have, sort of, another similar objective with the price image?
Frank: Well, we’re continually trying to maintain and grow our price image to show our consumers compelling value, but some of what’s been exciting here at the show today is it seems that some of the technology now exists to bring together the opportunity, to create one-to-one marketing that is truly customer-centric. In other words, I think our teams could probably work together, Ken, to create offers that are customer-centric where they share into our loyalty database their health and wellness needs and we create unique offers for them. Rather than what oftentimes happens today where four or five or ten different offers are created and then we try to match customers to the offers. You mentioned earlier that 70% of people have some kind of food sensitivity, and probably most of them don’t know that. But the ones that do know what they need to avoid oftentimes know what to avoid but maybe not what to go after to even enhance their health even further. And I think collectively we could probably come to those recommendations and then for that individual give that customer a fantastic one-to-one price offer that we could create.
Engage3’s Competitive Price Response helps retailers like Earth Fare model and define the impact of strategic pricing alternatives. It is integrated with Engage3’s Competitive Intelligence Platform and could be used with Nielsen market pricing data, if available.
Price Image algorithms are based on Markowitz’s Nobel Prize Winning Efficient Frontier Theory. Watch how this theory is applied to retail pricing in this video.